The town has a goal of maintaining at least 2.5 percent of expenditures in its undesignated fund balance and to keep "nondedicated revenue-supported debt" -- or debt that is neither self-supporting or excluded from Proposition 2 1/2 levy limits -- to 10 percent or less of the total budget, according to Standard and Poor's.

Littleton also maintained S&P AA Underlying Rating on the town's existing general-obligation debt. S&P Underlying Rating (SPUR) measures the ability of a municipal government to pay back its debt without using additional collateral or other credit enhancements attached to the bonds. The AA rating is given to municipalities that S&P believes has the "very strong capacity to meet financial commitments," according to the New York-based financial institution.

In April 2011, the town borrowed $7 million at an interest rate of 3.49 percent. The debtrefinancing will save the town $200,000 this fiscal year, according to Town Administrator Keith Bergman.

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Bergman said he will not know how much of the drop in the interest rates came from the favorable S&P rating and how much of it can be attributed to the overall state of the economy until he compares the rates to those of bonds issued by other Massachusetts communities.

S&P uses its own assessment methodology to measure the health of municipal financial management. "Strong" indicates that "practices are strong, well embedded, and likely sustainable," according to the company.

Management uses historical data and five-year revenue-and-expenditure projections, among other information, to compile its spending plans, and the town has a long-term financial plan through 2018 with a goal of maintaining at least 2.5 percent of expenditures in its undesignated fund balance and limit debt, S&P said.

For the AA rating, S&P cited Littleton's access to major transportation infrastructures -- such as Routes 2 and 495 and the commuter-rail service to Boston -- as some of the factors. The town budgets conservatively while property taxes remain the town's primary revenue source, accounting for 71 percent of general-fund revenue, S&P said.

"We view Littleton's financial position as strong as the town historically maintains available fund balance above 8 percent of expenditures," S&P said in its Rating Report, adding that free cash from fiscal 2012 increased the fund balance to $2 million.

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